Embattled Theranos founder Elizabeth Holmes doubles down on efforts to keep 'wealth, spending, and lifestyle' from fraud case
Holmes is scheduled to face trial in July 2021
Attorneys representing embattled Theranos founder Elizabeth Holmes have fired back again in an attempt to prevent prosecutors from detailing the one-time billionaire’s “wealth, spending, and lifestyle” as they try to prove a motive for her alleged fraud, court papers show.
The defense team’s late Tuesday filing is the latest back-and-forth over the matter, which was first introduced by Holmes’ attorneys in a November 2020 motion, and argues that the government is hoping to “invite a referendum on startup and corporate culture,” the document states.
Prosecutors with the Northern District of California fired back in January, when they argued that Holmes’ “desire to retain her wealth and status created a powerful motive for Defendant to continue and conceal her fraud.”
Holmes is scheduled to face trial in July 2021, on several charges of wire fraud or conspiracy to commit wire fraud.
Elizabeth Holmes, founder and former CEO of Theranos, arrives for motion hearing on Monday, November 4, 2019, at the U.S. District Court House inside Robert F. Peckham Federal Building in San Jose, California. (Photo by Yichuan Cao/NurPhoto via Getty
In their most recent filing, the defense argued that the government’s efforts to have these details included “makes clear that it intends to inflame the jury improperly by suggesting that irrelevant evidence concering Ms. Holmes’ income, wardrobe, and travel itineraries gave her a motive to commit a federal crime.”
“This evidence says nothing whatsoever about Ms. Holmes’ motive; if it did, any CEO could be said to have a motive to commit fraud,” court papers state. “Rather, the real value of the evidence to the government is to paint a (misleading) picture of Ms. Holmes’ as a woman who prioritized fashion, a luxurious lifestyle, and fame, and to invite a referendum on startup and corporate culture.”
Lawyers further call the prosecutors’ arguments “inaccurate,” as well as “irrelevant and highly inflammatory.” They asked any such evidence to be excluded “from the government’s case-in-chief.”
Theranos Chief Executive Officer Elizabeth Holmes speaks on stage at the Glamour Women of the Year Awards where she receives an award, in the Manhattan borough of New York November 9, 2015. REUTERS/Carlo Allegri
“[T]he government is seeking to use the evidence to invite the jury to speculate that that (sic) Ms. Holmes did commit fraud because wealth and its benefits are desirable,” the government further argues, calling such an argument “extremely prejudicial.”
“The potential evidence regarding the amount of money Ms. Holmes earned from Theranos, the value of her stock, the type of car she drove, the house she lived in, the people she met, and her travel accommodations risks invoking class prejudice,” the defense team continues. “Evidence regarding the purchase of expensive clothing, makeup and self-care products, and other goods …does not establish a motive to commit fraud; instead, it seeks to inflame by appealing to stereotypes of class and gender.”
Forbes reported in 2015 that Holmes, who was once considered the nation’s youngest female billionaire, boasted an estimated net worth of $4.5 billion. As allegations of wrongdoing came out over the next year, her net worth reportedly dropped by nearly a billion and is expected to have plummeted since.
Prosecutors allege that Holmes and her rumored boyfriend, former chief operating officer Ramesh “Sunny” Balwani, deliberately misled investors, policymakers and the public about the accuracy of Theranos’ blood-testing technologies.
Elizabeth Holmes (Reuters); Ramesh "Sunny" Balwani (Getty Images) (Reuters / Getty Images)
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The two pleaded not guilty to wire fraud and conspiracy to commit wire fraud. If convicted, they could each face maximum penalties of 20 years in prison, a $2.75 million fine and possible restitution, the Department of Justice said.
Holmes, a Stanford University dropout once billed as the “next Steve Jobs,” forfeited control of the blood-testing startup in 2018, when she agreed to pay $500,000 to settle charges that she oversaw a “massive fraud.”
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In late 2016, Theranos began shutting down its clinical labs and wellness centers and laid off more than 40% of its full-time employees. The company reportedly ceased operations in September 2018, months after Holmes stepped down as chief executive.
Holmes’ trial was originally expected to begin in March, but was recently postponed to July because of the novel coronavirus. Balwani’s trial was also recently postponed.
The Associated Press contributed to this report.